September 19 (00:58:06-1:17:28)
Public hearings and publication are mandatory according to Cagayan Sugar Milling Corporation
v. Secretary of Labor
CAGAYAN SUGAR MILLING COMPANY (CARSUMCO) v.
SECRETARY OF LABOR AND EMPLOYMENT,  DIRECTOR
RICARDO S. MARTINEZ, SR., AND CARSUMCO EMPLOYEES
UNION
FACTS: On November 16, 1993, Regional Wage Order No.
RO2-02 was issued by the Regional Tripartite Wage and
Productivity Board (RTWPB) of the Department of Labor and
Employment (DOLE).  pertinent facts, and, based on the standards and criteria
On September 12 and 13, 1994, labor inspectors from the
DOLE Regional Office examined the books of the petitioner
CARSUMCO to determine its compliance with the wage order
and found that it did not implement an across the board
increase in the salary of its employees. At the hearing for the
alleged violation, CARSUMCO maintained that it paid the
mandated increase in the minimum wage. In an Order dated
December 16, 1994, the public respondent Regional Director
Ricardo S. Martinez, Sr. ordered CARSUMCO to pay the
deficiency in the salary of its employees in the total amount
of P555,133.41.
On January 6, 1995, CARSUMCO appealed to the public
respondent Labor Secretary Leonardo A. Quisumbing. On
October 8, 1996, Quisumbing dismissed the appeal, affirmed
the Order and denied the motion for reconsideration. On
February 12, 1997, the private respondent CARSUMCO
Employees Union moved for execution of the December 16,
1994 Order.  Martinez, Sr. granted the motion
and issued the writ of execution. On March 4,
1997, CARSUMCO moved for reconsideration to set
aside the writ. On March 5, the DOLE regional sheriff served
on CARSUMCO a notice of garnishment of its account with
the Far East Bank and Trust Company. On March 10, the
sheriff seized petitioner's dump truck and scheduled its
public sale on March 20, 1997.
The Court issued a temporary restraining order (TRO)
enjoining the respondents from enforcing and conducting
further proceedings until further orders.
ISSUES:
Whether or not the Wage Order is null and void for having
been issued in violation of the procedure provided by law
and of the petitioner's right to due process of law
Whether or not the Wage Order clearly provided for the fixing
of a statutory minimum wage rate, not an across the board
increase in wages
RULING: Wage Order No. RO2-02, passed on November 16,
1993, provided for an increase in the statutory minimum
wage rates for Region II. More than a year later, or on
January 6, 1995, the Regional Board passed Wage Order
RO2-02-A amending the earlier wage order and providing
instead for an across the board increase in wages of
employees in Region II, retroactive to the date of effectivity
of Wage Order RO2-02.
CARSUMCO assails the validity of Wage Order RO2-02-A on
the ground that it was passed without the required public
consultation and newspaper publication. 
Article 123 of the Labor Code provides:
"ART. 123.  Wage Order.  Whenever conditions in the region so
warrant, the Regional Board shall investigate and study all
herein prescribed, shall proceed to determine whether a Wage
Order should be issued.  Any such Wage Order shall take
effect after  fifteen (15) days from its complete publication in
at least one (1) newspaper of general circulation in the region.
In the performance of its wage-determining functions,  the
Regional Board shall conduct public hearings/consultations,
giving notices to employees' and employers' groups and other
interested parties. x  x  x"
The record shows that there was no prior public
hearings/consultations and newspaper publication insofar
as Wage Order No. RO2-02-A is concerned. In fact, these
allegations were not denied by the public respondents in
their Comment. Their position is that there was no need to
comply with the legal requirements as Wage Order No. RO2-
02-A merely clarified the ambiguous provision of the original
wage order.
The problem is, people don’t mind wage order anymore, they
just accept. There are some employers who will not
immediately follow these rules. If you will not follow what is
required by law, most likely, you will be harassed by
regulatory bodies. If you do not pay your taxes, there is BIR
looking at you. ISO is quality management system wherein
the company is being reviewed if it is compliant. It’s better if
your company is ISO registered.
Art. 124. Standards/Criteria for minimum wage fixing. The
regional minimum wages to be established by the
Regional Board shall be as nearly adequate as is
economically feasible to maintain the minimum standards
of living necessary for the health, efficiency and general
well-being of the employees within the framework of the
national economic and social development program. In
the determination of such regional minimum wages, the
Regional Board shall, among other relevant factors,
consider the following:
a. The demand for living wages;
b. Wage adjustment vis-à-vis the consumer price
index;
c. The cost of living and changes or increases
therein;

d. The needs of workers and their families;
e. The need to induce industries to invest in the
countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to
pay of employers;
i. Effects on employment generation and family
income; and j. The equitable distribution of income
and wealth along the imperatives of economic and social
development.
The wages prescribed in accordance with the provisions of
this Title shall be the standard prevailing minimum wages
in every region. These wages shall include wages varying
with industries, provinces or localities if in the judgment of
the Regional Board, conditions make such local
differentiation proper and necessary to effectuate the
purpose of this Title.
Any person, company, corporation, partnership or any other
entity engaged in business shall file and register annually
with the appropriate Regional Board, Commission and the
National Statistics Office, an itemized listing of their labor
component, specifying the names of their workers and
employees below the managerial level, including learners,
apprentices and disabled/handicapped workers who were
hired under the terms prescribed in the employment
contracts, and their corresponding salaries and wages.
Where the application of any prescribed wage increase by
virtue of a law or wage order issued by any Regional Board
results in distortions of the wage structure within an
establishment, the employer and the union shall negotiate
to correct the distortions. Any dispute arising from wage
distortions shall be resolved through the grievance
procedure under their collective bargaining agreement and,
if it remains unresolved, through voluntary arbitration.
Unless otherwise agreed by the parties in writing, such
dispute shall be decided by the voluntary arbitrators within
ten (10) calendar days from the time said dispute was
referred to voluntary arbitration.
In cases where there are no collective agreements or
recognized labor unions, the employers and workers shall
endeavor to correct such distortions. Any dispute arising
therefrom shall be settled through the National Conciliation
and Mediation Board and, if it remains unresolved after ten
(10) calendar days of conciliation, shall be referred to the
appropriate branch of the National Labor Relations
Commission (NLRC). It shall be mandatory for the NLRC to
conduct continuous hearings and decide the dispute within
twenty (20) calendar days from the time said dispute is
submitted for compulsory arbitration.
The pendency of a dispute arising from a wage distortion
shall not in any way delay the applicability of any increase
in prescribed wage rates pursuant to the provisions of law
or wage order.
As used herein, a wage distortion shall mean a situation
where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among
employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure
based on skills, length of service, or other logical bases of
differentiation.
All workers paid by result, including those who are paid on
piecework, takay, pakyaw or task basis, shall receive not
less than the prescribed wage rates per eight (8) hours of
work a day, or a proportion thereof for working less than
eight (8) hours.
All recognized learnership and apprenticeship agreements
shall be considered automatically modified insofar as their
wage clauses are concerned to reflect the prescribed wage
rates. (As amended by Republic Act No. 6727, June 9,
1989)
Take note of Article 124, this was asked in the bar.
What are the factors that should be considered by the board
in determining the minimum wage? (answer is Art. 124)
Art 124 Discusses about wage distortion. The prescription of
wage distortion shall mean a situation where an increase in
the prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or
salary rates between and among employee groups in an
establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation.
For example, the minimum wage now is Php 391. In a
company, there is a salary structure. If you’re a clerk, in your
first entry that is Php 391. Then later it becomes Php 420,
then Php 470. If you’re a computer programmer, the entry
level is Php 500. Then it becomes Php 560, Php 590, Php
600. Different positions have different salaries.
Supposing this wage order, due to public demand, the
minimum wage will be increased to Php 410, who will benefit
from this? Will all employees benefit? No. It is only the
minimum wage earner who will benefit and will be entitled to
an increase of Php 410. Before, the difference of the wages
of the clerk and the computer programmer is Php 29, now it
is only Php 10. Is there a wage distortion? I do not know.
Because wage distortion shall be in a situation where an
increase in the prescribed wage rates results in the
elimination or severe contraction of intentional quantitative
differences.
If its php 420, is there sever contraction? Imagine if a guy
who is hired today is paid Php 420 and a guy who was hired
two years ago is also paid Php 420. That is an example of a
wage distortion. The wage distortion resulted when the wage
order was applied.
For example, the salary in a company increased because the
production and volume of sales are very good. Is there wage
distortion when there is contraction? If the contraction is
done by virtue of company policy, there is no wage
distortion. For example, a person was hired last July with a
starting salary of Php 391 then I will hire a person for P500
to entice him to work for me. Is there wage distortion? No.
That is management prerogative. Wage distortion only
applies if there is a wage order and if it is mandatory.
How would you settle wage distortion if it is organized (by
labor union)? You do it through grievance machinery under
the CBA. A CBA has a grievance procedure wherein they will
state therein how a grievance shall be settled if the wage
distortion is not settled at the plant level. If it is not settled,
you go to arbitration. You select and arbitration to determine
whether or not there is wage distortion. If there is no union
(unorganized), go to NCNB or settle. If it is not settled, you
go to labor arbiter.
What are two methods of minimum wage adjustment? Floor
wage method and salary-ceiling method. In floor-wage
method, you add something (amount) to the existing to the
prevailing statutory minimum wage. Whereas in salary-
ceiling method, you will determine what should be the
minimum wage.
If a company has many offices in different regions, the
prevailing rates in that region should apply to the employee
in that region where he is assigned. For example, the person
in Manila with the same job description with someone from
Davao will receive higher amount than those in Davao
because he is stationed in Manila.
Supposedly, the person from Manila was transferred to
Davao City. His rate there is Php 600 while here, it is only Php
391. Will you readjust the amount received by the guy from
manila? I think you should not because that is diminution.
Why do companies make salary structures? Can you imagine
if a company has no salary structure and you want to give an
increase to a person who is efficient.